Oil prices were steady as markets reacted to geopolitical uncertainty surrounding the US move to take control of Greenland, along with growing concerns over a potential global oil surplus.
West Texas Intermediate (WTI) traded near $59 a barrel, showing little change from Friday’s close. Trading activity was muted on Monday due to a US holiday, while Brent crude settled below $64 a barrel. President Donald Trump’s push to annex Greenland has unsettled global markets, pressured the US dollar, and raised fears of a possible trade conflict between the US and the European Union.
Market participants believe a full-scale retaliation between the US and EU is unlikely. “The market isn’t pricing in a complete trade war, and a compromise is still the most likely outcome,” said Mukesh Sahdev, CEO of XAnalysts Pty Ltd. However, he added that if tensions escalate, the US could have the upper hand due to its stronger economy and energy supply position.
Crude prices continue to face pressure as global supply appears to be outpacing demand. Physical oil prices in parts of the Middle East have declined as OPEC+ producers increase output. The International Energy Agency (IEA), which is set to release its next market outlook on Wednesday, has repeatedly warned of a significant oversupply this year.
Despite broader risk-off sentiment, some support for oil prices has come from a weaker US dollar and strong timespreads. “These factors have helped cushion oil prices in the short term,” said Warren Patterson, Head of Commodities Strategy at ING Groep NV.
However, Patterson cautioned that expectations of a large supply surplus point to lower prices ahead, while the risk of further escalation in US-EU tensions could add additional downside pressure.
That said, not all regions are experiencing oversupply. Short-term tightness remains in certain markets due to disruptions at the Caspian Pipeline Consortium port in the Black Sea and operational issues at Kazakhstan’s major Tengiz oil field. These disruptions have reduced crude supply from the Mediterranean region in the near term.
Prices Snapshot
- WTI (February delivery): Up 0.1% at $59.52 a barrel as of 8:05 a.m. in Singapore
- Brent (March settlement): Down 0.3% at $63.94 a barrel on Monday
